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Will Copper Spring Higher?

Sunday, 22 Jul 2012 | 1:52 PM ET

Freeport-McMoran Copper & GoldCEO Richard Adkerson told CNBC’s “Closing Bell” he expects copper prices to be higher longer term.

Reel of uninsulated copper wire
Charles D Winters | Photo Researchers | Getty Images
Reel of uninsulated copper wire

Although the Chinese economy is slowing, the Freeport-McMoran CEO said it hasn’t had as big an impact on copper demand as it has had on other commodities.

“There’s continued spending on infrastructure,” he said, adding the markets are reacting to signs that the Chinese government will take actions to support growth.

With inflation under control, Adkerson is “optimistic about China.”

Copper demand in the U.S. is also running stronger than the overall economy because of a pick up in the automotive sector and the beginnings of a rebound in housing, Adkerson said.

Freeport-McMoran CEO: Earnings, Copper & China
Freeport-McMoran Copper and Gold CEO Richard Adkerson, discusses his company's Q2 earnings, the slowdown in China, and what the price of copper may be in the next few years. "There is slowdown in China, but we're not seeing it as much in copper as other areas," says Adkerson.

Although Freeport-McMoran doesn’t make predictions about copper prices, Adkerson said that he’s very optimistic about the price of the red metal longer term.

Adkerson isn’t alone in expecting higher copper prices. Ephrem Ravi, Head of Metals & Mining Sector at Barclays, told CNBC Asiaon Tuesday that copper is the commodity that both he and markets are most bullish on. (Related: Copper Will Stay Above $8,000 This Year).

Markets Bullish on Copper
Ephrem Ravi, Head of Metals & Mining Sector at Barclays says that markets are bullish on copper and that it is a good thing that BHP Billiton can produce more of it.

A main reason for copper's strength is structural. “Copper as a commodity is supported by limited supplies,” Adkerson said.

Freeport-McMoran is in a position to take advantage of the limited supplies because it has very large reserves at its existing mines, Adkerson said. "So by investing in brownfield projects we can step up and provide supplies when the industry as a whole is challenged.”

“We can provide volumes and make a lot of money if prices go higher which I anticipate they will,” he continued.

Anglo-Australian miner BHP Billitonis also poised to benefit from higher copper prices. "The bright spot for us was the copper production at Escondida, which has been the big disappointment for BHP Billiton's production numbers over the last three or four years," Ravi said of BHP's production update last week. Escondida is BHP's Chilean copper mine.

With copper prices likely to head higher, Barclay's Ravi said "If BHP can produce more of it than all the better."

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